RETURN to T.O.- Ila EPORTS DES** I {8RESTRICTED Vw"HIN Filewr ONE WEEK Public Disclosure Authorized
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RETURN TO T.O.- Ila EPORTS DES** i {8RESTRICTED vw"HIN fILEwr ONE WEEK Public Disclosure Authorized This report is restricted to use within the Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized TECHNICAL REPORT on the ITUTINGA HYDROELECTRIC POWER PROJECT Public Disclosure Authorized of the STATE OF MINAS GERAIS BRAZIL July 3, 1953 Public Disclosure Authorized Technical Operations Department Currency Equivalents $1.00 - 20.0 cruzeiros 1 cruzeiro - $0.05 1 mUlion cruzeiros - $50,000. N.B. The above equivalents are based on the effective cost, including tax and commission, of buying dollars at the present official exchange rate. The free rate is about $1.00 * 40.0 cruzeiros. TABLE OF CONTENTS Page No. I. Scope of this Report . ... 1 II. State Organizationfor Power Development 1 III.The borrower ........... .... .. .. *.. .. 1 IV. Descriptionof the Project ...... ......... , 1 V. Engineering and uonstruction........... 3 VI. Construction:chedule 3 VII. Power llarket.......... ......... VIII. ConstructionCost ................... 5 IA. Fower kiates..... .......O , .. 6 X. Expenditures, Sources of Finance, Income and Cash Position .,.. ,.. ... 6 XI.l:ianagement ........... *....S...*... ............ 9 ,II. Conclusions and Recommendations ................ 9 PYPPENDICESA, B, C -!1D D (1Lotes to -ppendixD) B R A Z I L TTJTTUTG;LHlRO!L.CTRTC ?OW'71 ?RGJ"CT STi,T' OF MI.'AS GBRAIS ?ROJ7CT ITO. 11 I. Scope of this ReDort 1. An anplication for a loan has been received from the 3razilian Govern- ment through the Joint Commissionto cover the foreIgn exchange cost for Uhe constructionof a hydroelectricpower project at Itutinga on the Rio Grande River in the southern oart of the State of Minas Gerais. 2. Tnis report presents an appraisal of the oroject with recommendations. It is based on informationobtained from the Joint Commissionand visits by Banikrepresentttives. IT. State Organizationfor Power Develonment 3. The State Government in 10146started an ElectrificationProgram vrhich now involves the constructionof a number of electricpower plants including Itutinga. 4. In order to carry out this program, a number of laws were passed author- izing the Stete to orga.nizeand -certicipateiil "m.xed companies,' in w.Yhich shares nmy be held by the State and. by private iiltererts. The existing organi- zation operatingund.er these laws consisti of a Hol&ing Company and various subsidiarycompanies. The Holding Comoany, "CentraisElectricas de Minas Gerais S.A.,t (CEI:TG), which is at present Qublicly owned, is authorized to establish, manage, finance and eDrovid-e tech,ni.cal, accounting, legal and execu- tive assistance to its subsicl_.-ry companies. The latter are regional in character aned are designed to construct and operate electric power projects in the areas designated byorCI:TG. ITT. The Borrower 5. C$MIG has established four subsidiaries inclucing the Comnanhia de Eletricidade do alto Rio Grande (CMhRG) which is executing the Itutinga. project. 6. The proposed loan would be made jointly to CD4IG and C7atRGas co- borrowers and guaranteedby the United States of Brazil. IV. Descr5ptlon of the Project 7. The proiect consists of the constructionof a hydroelectric power plant with an initial capacity of 24,000 klcw,located at the Ttutin-a rapids on the Rio Grande River. It will be a run of the river plant with storage only for dail1yregulttion, Also included in the nroject is the constrlctionof the necessary transmission lines and distribution systems. - 2 - &. Stream flow data are available for the past 17 years. These data show ttrat the avera& minimum flow gives a fi:m capacity of 24,000 kw at a 50, load factor, which is adequate for the market descrIbed hereafter. 9. The dam, which will provide t normal het.u of30 meters, will be of a composite design, the main part being of concr-'te. The spillway 4s aesi.gn- ed for a total discharge of more than double tI.e maximum recorded streart flow measured ovFr a period of 17 years. Two v.rtical turbines will be installed initiilly, each with a rated capacity of 17,000 horsepoler. The directly connected generators will each have a rtted capacity of 12,000 Int. The generators will be of a totally enclosed destin, permitting outdoor installation and therefore simolifying the design of the powerhouse strllc- ture. 10. The plant is designed to permit installationtf two more genecs.ting units at a future date. This work, howeverr,is not I part of the project now under consideration. 11. The outdoor substationwill be equipped.with si:-,single phase, 5,000 kva step-up transformersw!ith high tension taps :t 69 kv and 138 ,V. Switchingand control equipment will be of Conmentiona.design. 12. The generated power will be tranismittedby means "Paluminum cable over the following transmissionlines: Voltage -Aoprcly. ynO Tower Branch KV LeanthKM Circu't Construction Ttutinga-Lavras 69 40 Single Steel itutinga-S.Joao del Rey 138 1/ 45 Single Steel S. Joao del Rey-Barroso-Sitio 69 55 Double Wood Barbacena Branch 69 7 Single Wood Itutinga-iTazareno 69 2/ 25 Single Wood 1/ Will initially be operated on 69 kv. 2/ Wtill initially be operated on 13.8 kv. 12. The industrial consumers located in Barroso, Sitio and ilazarenowill install their owr. step-down substation equi-oment,while CEARG will construct sten-down substations as follows: Town apa-' KVA Lavras 2,5 00 S. Joao del Rey .(00 Barbacena 2,r00 14. The local utilities will reconstructand exoand their own distribu- tion systems. - 3 - V. Engineering and Construction 15. The present plans for the constructionof the project prepared by C012RG, are based on engineeringstudies carried out by the Brazilian engineering firm Servix Engenharia, Ltd., in 1949 and by Burns and Roe Inc. of New York in 1951. The plans vwere revievred by the Bank's con- sultant, PMr. A. J. Ackerman, in October, 1952, who found the project wrell designed and complyingwrith basic principlesof economic develop- ment of the available water power. 16. At the time of the visit of the Bank's representatives,contracts had already been placed as follows:- a) after comparison of bids from three U.S. suppliers,a contract had been signed in June 1952 with WTestinghouse for major equipment for the plant; b) after comparisonof bids from tro of the principal civil constructionfirms in Brazil, a contract had been signed in April 1952 wTithCia. Iorrison Knudsen do Prasil, S.A., for the detailed engineeringand complete constructionof the power plant including the step-up substation; c) following international bidding, a contract had been signed in December 1952 with General Electric for substation equipment. The goods and services being provided above are suitable for the project and reasonablein price. 17. Orders for the remainder of the imported equipment are being placed on the basis of internationalbidding. 18. Constructionwork was started in iIay,1952, and is progressing as scheduled. VI. ConstructionSchedule 19. The start and comnletiondates of the major parts of the project are estimated as followrs: Item Start Complete Civil works May 1952 December 1954 Installation1, Unit April 1954 December 1954 Installation2. Unit April 1955 December 1955 TransmissionLines January 1953 December 1954 Substations January 1953 December 1954 Local Distribution January 1953 December 1956 1/ The second circuit of the Sao Joao del Rey-Sitio line and change- over from 69 kv to 138 'kvin the substationto be completedby December, 1956. 20. The constructionschedules appear realistic and are in accordancewith delivery dates promised at present by the suppliers of main pieces of equipment. - 4 - VII. Povwer Market 21. The forecast of the power market is based on the sale of power to six consumers writh 80% going to three industries using doinestic resources, and the remainder to three public utilities. A. Industrial Load 22. (a) Ferro-Alloy Plant at Antonio Carlos (Sitio) The Plineracao Geral do Brasil, a holding company of the Jafet group, which owns and operates iron and manganese mines, steel mills and ferro- alloy plants, has made plans to constrict a new ferro-alloy plant at Antonio Carlos. These plans call for the initial installation of one elec- tric furnace (6,000 kw) which w.ould be ready for operation in the beginning of 1955 to be followed by a duplicate furnace in 1957. The company vwould not undertake this venture without an assured source of powrer and accord- ingly entered into a contract vrith CEARGin February, 1953, for the purchase of electric power starting in 1955. 23. (b) Cement LiUll at Barroso The mill, owned by Cia. de Cimento Portland, one of the leading cement producers in Brazil and ouner of a number of cement plants, is presently under construction and initial operations are scheduled to start in 1954. As in the case of the ferro-alloy plant, a contract has been entered into by CEARG and the company for the supply of 3,000 kmr of electric power in 1955 and 4,500 kvVin 1956. 24. (c) Tin I1ine at Sao Joao del Rey At the present time the powuerload is insignificant. However, explora- tion work now carried out by the Cia. de Estanho Sao Joao del Rey in the form of borings indicates there are large deposits of valuable tin ores that will make this a profitable mine operation in wihich case power demand would increase materially. B. Public Utilities 25. The plant will supply povwerto the utilities serving the small towns Sao Joan del Rey, Barbacena and Lavras. Two existing hydro powFrerplants in Sao Joao del Rey and Barbacena, each with a capacity of about 1,800 kv, will be kept in service after Itutinga starts operation. Diesel generating units in the three towns -rith a total capacity of 2,500 kh will be retired. Pow!erDemand 26. As may be seen in Appendix A, estimated powFerdemand increases from 13,000 kw in 1955 to the plantts full capacity of 2Lo,000 kwnrin 1958.